Unrest hampers distribution, causes increased costs: Eva

Unrest hampers distribution, causes increased costs: Eva

NUSA DUA, Bali (JP): PT Indofood Sukses Makmur expressed
concerns on Thursday over increasing political and social tension
in the country, saying that it could hamper distribution of the
company's products.

Indofood president Eva Riyanti Hutapea said on the sidelines
of the second World Ramen (Noodle) Summit here that social unrest
has penalized the company with increasing costs.

"We have no problems with the recent political developments
unless there is unrest. If there is unrest, that's terrible,
shops are closed, and people cannot do anything," Eva told
journalists.

"When an insecure situation occurs, it's difficult to get
transportation. If we want to go anywhere, we have to wait and
pay a much higher price."

Eva hoped the government can finally restore security and
order in the country, which has been rocked by a series of
religious and ethnic-related riots.

To reduce distribution risks and costs, Eva said, the company
had built noodles processing plants in 11 provinces in Sumatra,
Java, Kalimantan and Sulawesi.

The chairman of the Indonesian Food and Beverage Producers
Association, Thomas Darmawan, supported Indofood's argument and
said the government should help the private sector to address the
problem.

Thomas said the government could consider turning the National
Logistics Agency (Bulog) into a profit-orientated distribution
company.

Bulog's vast network and warehousing facilities would make it
a competitive distribution company when managed professionally,
he said.

In an uncertain situation like now, he said, producers with
vast distribution networks would excel.

Indofood, therefore, would continue to dominate the domestic
market until a new competitor with a better distribution network
emerged, he said.

Currently some local instant noodles manufacturers are trying
to emulate Indofood's distribution strategy by building plants in
different places closer to the customers, he went on.

Indofood controls more than 90 percent of the domestic instant
noodle market.

Distribution, nevertheless, is a delicate issue in a vast,
impoverished country like Indonesia, said T. Tjeng, a delegation
from China.

Bureaucratic procedures and licensing often became hurdles for
distribution companies to reach all parts of the country, he
said.

Indonesia, as the most efficient producer of instant noodles,
could sell the products at much lower prices to consumers if
distribution was smoother.

Koki Ando of the Nissin Food Co Ltd of Japan said at the
opening of the noodles producers summit here that distribution
would not be a problem for popular products.

Products sought after by the people would easier reach the
consumers as people would automatically build their own
distribution networks. Producers would need to distribute to
major cities only, and people would then distribute them to
remote areas.

But for products less known by the people, distribution was of
prime importance for producers. They must cooperate with
distributors with good networks or build their own top notch
distribution systems. (rid)